CTL Strategies ranked by Asia Law Profiles as a leading tax law firm in the Maldives
The Asia Law Profiles have ranked CTL Strategies as the leading law firm in the areas of taxation in the Maldives. It has also recognized us as the highly recommended firm in the areas of litigation and disputes.
The team at CTL Strategies has been praised by their clients as “dedicated and professional” in representing them in foreign investment and, cross-border taxation matters. The firm has a notably stellar reputation amongst local and multinational businesses in the Maldives, for managing and handling tax controversies and corporate litigation.
Income Tax Bill submitted to the Parliament
The Government of Maldives has sent the draft of the Income Tax Bill (“ITB”), intended to introduce Personal Income Tax and redesign the existing Business Profit Tax regime, to the Parliament today, 15 October 2019.
Under the proposed Bill, the existing Business Profit Tax (and non-resident Withholding Tax), Bank Profit Tax will be abolished and ‘rolled over’ to the income tax regime with certain changes. Although the BPT Act and Bank Profit Tax Act will be repealed with the introduction of the income tax, the taxes that were levied under those Acts will be continued under the Income Tax Act. The tax rates will remain the same for banks (25% on profits that exceeds zero Rufiyaa), corporations, partnerships and other bodies (15% on profits that exceed MVR500,000), although for individuals, the rates proposed are as follows:
One significant change from the existing BPT regime is that an individual’s salary income will be subject to income tax. Under the proposed Bill, the income tax on Salary will be paid on a ‘Pay As You Earn’ (PAYE) basis (referred in the ITB as ‘Employee Withholding Tax). That is, every time the employer pays salary, employer withholds income tax and pay that amount to MIRA. Salary includes basic salary, allowances, bonuses and other benefits provided to employee in consideration for their services. The PAYE tax brackets proposed in the bill are as follows:
Further, the non-resident Withholding Tax imposed under the BPT Act has also been ‘enhanced’ under the ITB. In addition, the ITB also introduces a more comprehensive Capital Gains Tax regime compared to the BPT Act.
The ITB is expected to be passed by the parliament within the next couple of weeks. The proposed commencement date of the Act is 1 January 2020.
(Photo credits: presidency.gov.mv)
Tax Alert, 15 October 2019
This issue covers the major changes that came into force with the ratification of the Second Amendment to the Tax Administration Act1 on 12 September 2019.
Some of the key changes brought by the Amendment include:
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